A Test Case for the DOJ’s New Policy?

In my last post: New DOJ Policy to Prosecute…Real or Smokescreen?, I commented that the DOJ’s new policy to go afterindividuals who commit financial crimes — not just settle for fines, was a step in the right direction. I also expressed some cynicism, given their track record so far.

While it’s my belief that the new DOJ stance is a defensive smokescreen and a public relations ploy to shield itself from widespread criticism, I would dearly love to be proven wrong.

In that policy statement, Deputy Attorney General Sally Yates stated unequivocally that the DOJ will now pursue criminals “regardless of whether they commit their crimes on the street corner or in the boardroom,”… “A crime’s a crime.” As she said in her memo, “We mean it when we say, “You’ve got to cough up the individuals.””

Perhaps, but the DOJ is known for its frequent changes in position. As my cohort, Michael Winston, author of World–Class Performance: The Commitment; The Pursuit; The Achievement, commented in the Huffington Post , they throw up “a smokescreen activated every six months or so to create the illusion of law enforcement.”

Well, it looks as if the DOJ may be facing an early test of its long overdue policy change and Deputy Attorney General’s Yates’ demand that attorneys play hardball with corporations, and to pursue individual executives from the outset of any investigation.

It looks as if some attorneys are doing just that. And what the DOJ does in responding and taking action on this case, may set a new precedent.

Last week, Bloomberg reported that private plaintiffs have filed two suits alleging bid-rigging by 22 primary dealers. The 115-page lawsuit was filed in a Manhattan federal court on Aug. 26, by Quinn Emmanuel Urquhart & Sullivan, LLP and other law firms. The plaintiffs built their case against the 22 primary dealers who serve as the backbone of Treasury trading, which include Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley.

Using the same analytical techniques which identified cheating involving LIBOR rates and the currency markets and using data from an expert in rigging cases,the plaintiffs said there’s evidence of cheating from at least 2007 through earlier this year, when press reports revealed the Justice Department investigation into the auction process. The expert witness’ conclusion: “… the defendants coordinated artificially to influence the results of the auctions in the primary market.”

In Will Banks “Cough Up Executives” in the Treasury Bid-Rigging Scandal, Yves Smith openly questions if the DOJ will really take to heart the new pronounced policy in pursuing this case, while cautioning that investigations and litigation are still underway. Nothing has yet to be proven. Still this could be “the case” that provides a breakthrough.

I don’t need to remind you that in the last six plus years, 49 financial institutions have paid out nearly $190 billion in fines and settlements, and only one banker, a mid-level trader at Credit Suisse, has received any jail time for activities linked to mortgage fraud. Yet, if we take Ms. Yates’ position, “one of the most effective ways to combat corporate misconduct is by seeking accountability from the individuals who perpetrated the wrongdoing,” and the DOJ at face value, it could well be that finally individuals will be found guilty. The playing field will change.

As it is, corporations are fined, yet the individuals who committed the crime go scot free. In some cases, they even get raises. So what do we expect if the crime is repeated? Heck – it’s not even treated as a crime.

Cases like the one cited are critical to watch. This could be a decided turning point for stopping the blatant rewarding of greed we’ve had on Wall Street for decades. It might be, as my colleague William Black says, “the end of the wave of recidivism in which elite bankers continued to defraud the public after promising to cease their crimes.”

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Richard Bowen is widely known as the Citigroup whistleblower. As Business Chief Underwriter for Citigroup during the housing bubble financial crisis meltdown, he repeatedly warned Citi executive management and the board about fraudulent behavior within the organization. The company certified poor mortgages as quality mortgages and sold them to Fannie Mae, Freddie Mac and other investors.

What People Are Saying About Richard M. Bowen

"Richard Bowen is one of my heroes. His is a story of human fortitude at its best and Wall Street at its worst."

~ William D. Cohan, NY Times Best Selling Author

2017-06-30T10:08:59+00:00

"Richard Bowen is one of my heroes. His is a story of human fortitude at its best and Wall Street at its worst." ~ William D. Cohan, NY Times Best Selling Author

http://www.richardmbowen.com/testimonials/2556/

"Richard Bowen reinforced my motto that "there is no right way to do a wrong thing.” Long after his presentation, the conversation has continued about personal responsibility and the courage to challenge things that appear to be wrong. We encourage this dialog and rely on it to help make our business stronger."

~ Eileen McDonnell, Chairman, CEO, & President, Penn Mutual

2015-02-13T19:51:19+00:00

"Richard Bowen reinforced my motto that "there is no right way to do a wrong thing.” Long after his presentation, the conversation has continued about personal responsibility and the courage to challenge things that appear to be wrong. We encourage this dialog and rely on it to help make our business stronger." ~ Eileen McDonnell, Chairman, CEO, & President, Penn Mutual

http://www.richardmbowen.com/testimonials/711/

"Richard Bowen, you are a star and a hero."

~ Ben Stein, Economist and Political Commentator

2015-02-13T19:50:26+00:00

"Richard Bowen, you are a star and a hero." ~ Ben Stein, Economist and Political Commentator

http://www.richardmbowen.com/testimonials/712/

"Richard's speech at the April Financial Executives International dinner was informative, interesting, riveting, and fast moving. The feedback from members was overwhelming positive, and Richard received one of the few standing ovations given by our membership."

"Richard's speech at the April Financial Executives International dinner was informative, interesting, riveting, and fast moving. The feedback from members was overwhelming positive, and Richard received one of the few standing ovations given by our membership." ~ Jim Farrell, Program Chairman, Dallas Chapter, Financial Executives International

http://www.richardmbowen.com/testimonials/532/

"Richard Bowen has been there, done that, and has the scars to prove it, and his message of corruption at the highest levels of industry and government needs to be heard. I only wish that more bankers had the courage that Bowen exhibits. He is not only one of the most talented bankers I have ever met, he has more integrity than all the bankers on Wall Street put together. If his former employer had listened to him taxpayers would not have had to bail out Citi for the third time in the last 30 years."

~ Dennis McCuistion, Host of the McCuistion TV program

2014-12-28T19:48:06+00:00

"Richard Bowen has been there, done that, and has the scars to prove it, and his message of corruption at the highest levels of industry and government needs to be heard. I only wish that more bankers had the courage that Bowen exhibits. He is not only one of the most talented bankers I have ever met, he has more integrity than all the bankers on Wall Street put together. If his former employer had listened to him taxpayers would not have had to bail out Citi for the third time in the last 30 years." ~ Dennis McCuistion, Host of the McCuistion TV program

http://www.richardmbowen.com/testimonials/533/

"Richard Bowen is a dynamic, entertaining speaker and story-teller - a CPA with a great personality!"

~ Betty Garrett, Garrett Speakers International

2014-12-28T19:47:50+00:00

"Richard Bowen is a dynamic, entertaining speaker and story-teller - a CPA with a great personality!" ~ Betty Garrett, Garrett Speakers International

http://www.richardmbowen.com/testimonials/531/

"I believe Richard Bowen is the only keynote speaker to ever receive a standing ovation from the Texas Society of CPA’s at any of its annual conferences."

~ Fred Timmons, Chairman of The Texas Society of CPA's

2014-12-28T19:47:22+00:00

"I believe Richard Bowen is the only keynote speaker to ever receive a standing ovation from the Texas Society of CPA’s at any of its annual conferences." ~ Fred Timmons, Chairman of The Texas Society of CPA's